LightSquared, the embattled wireless Internet venture backed by Harbinger Capital Management, won a one-week reprieve from either a default or a bankruptcy filing yesterday.

The company's creditors agreed to extended a waiver on covenants linked to $1.6 billion in debt. The two sides are continuing to work on a longer-term agreement; LightSquared has technically been in breach of the covenants since the Federal Communications Commission revoked a preliminary waiver in response to concerns that LightSquared's network would interfere with global positioning systems.

That decision has sent Harbinger and its founder, Philip Falcone, scrambling to save their $3 billion investment in LightSquared. Falcone has publicly mused about a bankruptcy filing, calling it the best way for Harbinger, which owns 96% of LightSquared, to maintain control of the company.

LightSquared's creditors, among them Carl Icahn and Appaloosa Management, do not want to see a bankruptcy filing, obviously. And they also don't want to see Falcone as LightSquared's public face anymore: A long-term deal, which could give LightSquared as much as two years of breathing room, could see Falcone stepping down from LightSquared's board as well as an agreeing not to put LightSquared into voluntary bankruptcy.

The precise parameters of such a deal remain unclear. Creditors would reportedly like to see Falcone made personally responsible for the debt if he pushes LightSquared into bankruptcy or the naming of a director or group of directors with veto power over a bankruptcy filing. While Falcone is believed to accept the need for him to step away, it is unclear that he has approved either of the other provisions.

A group of LightSquared's creditors, including Icahn, hired a high-powered bankruptcy lawyer last month. But Icahn took pains yesterday at a New York investment conference to downplay his fight with Falcone, who as late as March was attempting to enlist him as an ally.

The media is "making this into this huge shoot-out that it's really not," Icahn said.

"We don't call the shots in that deal," he added. "We have one seat on the committee out of six" and a "relatively small position" in LightSquared debt.

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